Morning Eurohubsters, Craig McGlashan here with the Dealflow.
London is bracing for temperatures potentially as high as 40 degrees Celsius, but that looks nowhere near as hot as the UK’s private equity market this morning.
Splitting up. The potential deal that really grabbed my eye was for London-based financial news and information publisher Euromoney Institutional Investor – where I worked before joining PE Hub Europe a month ago.
Euromoney’s board have agreed to a cash offer of £14.61 a share – valuing the company at around £1.7 billion – from private equity firms Astorg and Epiris. Euromoney said that was a 33.5 percent premium to the closing share price on June 17, just before the offer period began on June 20. It was a 43.5 percent premium to the volume weighted average price of the three month period to June 17 and 53.7 percent to the six month equivalent.
Under the agreement, which needs to get through a shareholder vote, Euromoney will split into two businesses. Astorg will take commodity pricing service Fastmarkets, while Epiris will have majority control of the rest.
Astorg had tracked Fastmarkets “for many years”, according to a statement by partner James Davis and director Michal Lange. “We look forward to providing the additional capital and resources that are required to accelerate Fastmarket’s next phase of organic and inorganic growth,” they added. “This investment further demonstrates Astorg’s commitment to backing fast-growing data and software businesses.”
Epiris partners Ian Wood and Chris Hanna noted that the firm has been “an experienced and successful investor in the B2B information space, including some of the components of the broader Euromoney business”. They said that they “will empower the individual teams” and “back them with further investment to accelerate growth, both organic and through M&A”.
Coffee to go. Elsewhere in UK private equity, The Sunday Times reported yesterday that Starbucks has hired Houlihan Lokey to look into potential buyers for its UK business, which is under pressure from rising costs and new competitors.
Private equity companies are reported to be among the potential buyers.
Insolvency rises. While Euromoney and Starbucks are at the bigger end of the buyout scale, I’ve heard that there could be lot of opportunities to pick up smaller bargains before the end of the year.
I was chatting with a lawyer who works on private equity deals. He told me that the fourth quarter could be particularly interesting for buying opportunities, given covid relief schemes for firms are set to expire, potentially hurting those struggling firms that had been “insulated” by the government support.
That many firms have borrowed using covenant-lite loans, which do not require borrowers to hit performance tests over time, could also exacerbate a sudden spike in insolvencies.
“We will see more of the real impact on business,” the lawyer told me. “We will see a sharp rise in insolvency. For private equity, that doesn’t mean things are bad. It could open a whole raft of buying opportunities.”
That’s it from me – stay safe in the heat and we’ll speak again tomorrow.